David Simon, a key guy at Yahoo, is world class at using simple language to describe tricky concepts. And his riffs about oysters and pearls should help you understand the value of traffic to your site. Here’s my take on David’s oyster vision and the lessons it offers for e-marketers.
Lesson one: Pay what it’s worth, not what you had in mind on the drive to the market.
The Oyster Bar in New York’s Grand Central Terminal has been serving oysters since 1913. It sells roughly 40 varieties from all over the world. The prices range from $1.75 to $2.75 each. The seafood buyer from the Oyster Bar who goes to Fulton Fish Market at 4:30 each morning knows something most Web business owners are just coming to understand: Oysters – like visitors – are available to buyers who want them.
If you want to get visitors to your Web site, you can. Just like oysters, the price varies depending on a range of criteria that boils down to supply and demand. If oysters are popular and the quality is good, you can expect to pay more. If you’re willing to settle for oysters that are less than fresh, you can have just about all you want.
The buyer at the Oyster Bar doesn’t go to the docks with a plan on what to spend. He goes planning to buy the oysters he needs. Businesses whose lifeblood depends on traffic can’t always stick with the number they wrote in the business plan. They have to take a realistic view of the market.
Lesson two: What if you were buying the oysters just to find pearls?
Buying oysters to get pearls is like buying impressions to reach buyers. If you want pearls, don’t just keep buying more oysters. Research and test to find out what types of oysters generate the most pearls. That includes looking at the origin of the oysters. Do pearls from one oyster bed pay off more than those from another? Or maybe you’d look at when they were harvested. At what depth? In what quantity?
Smart online marketers examine all the possible sources and criteria for attracting raw eyeballs. Some figure that culturing pearls inside low-cost oysters is a lot cheaper and more reliable than trolling all over for the one-in-a-million natural pearl. Others think prefiltering incoming traffic is more likely to give them the buyers they seek.
Regardless of your strategy, it’s not about the cost of the oyster in the end. It’s about the cost of the pearl. This is why CPM comparisons without back-end analysis are ridiculous. Who cares if it costs you $400 CPM? If every person you reach is a buyer, you win.
Lesson three: What’s a pearl worth?
If the guys shucking throw the pearls in a pile with empty shells, you’re out of business. This leads to five big truths:
• Every oyster, until opened and thoroughly checked, should be treated as if it contains sweet oyster meat and a pearl. Too many sites treat cheap traffic like cheap oysters, not taking the time to carefully sift through for the pearls. And if none of the oysters you’re buying have pearls, it is time to look for a problem in the shucking room!
• The cost of the pearl has nothing to do with the cost of that oyster. If the oyster you found the pearl in cost $1.50 but you had to open 199 others to get it, that pearl was worth $300. More, actually, since you have to add labor and transportation costs.
• Don’t add in your overhead and fixed costs, though. Remember, you can always buy more oysters, so your cost per pearl is variable if you’re willing to scale.
• Every successful pearl hunter knows, to the penny, how much the pearls are costing him.
• Buying an oyster is an investment, not an expense. And when your investments are paying off, it’s foolish to have a ceiling. If you’re making money on those oysters, buy more, now, before the price goes up.
Lesson four: Good oysters get expensive or depleted.
You can’t relax when you find a good source of pearls. Your competition will bid up the price or the oysters will run out. So the process of pearl hunting is an ongoing one in which you keep looking for new efficiencies. And more often than not, you’ll find them in your factory, not in the oyster man’s bucket.
There’s a saying about eating oysters in months that have an “R” in them. Well, November is one of those months. I don’t know if that means it’s OK to eat oysters or not. I can never remember. But it sure is a great time to buy traffic.
